Contrary to popular belief, non-profit boards of directors have more similarities than differences from for-profit boards.
Both play a very important role in ensuring that the organization achieves its goals and objectives, and also have the responsibility of hiring a capable CEO or executive manager. They also make sure that the organization adheres to legal standards and ethical norms.
Ginger Silverman has served on advisory boards and boards of directors for private, public and non-profit companies including Norco Delivery Services, IVIU technologies, Cutagenesis, Oroscience, and Susan G Komen.
She has noted in her diverse experience that there is more similarities than differences between non-profit boards and for-profits. The level of fiduciary responsibility is the same for both kinds of boards. If the advice or decisions voted upon by the board of directors steers the company in the wrong direction, they are financially held responsible.
According to Ginger, “you have a fiduciary responsibility to make sure all monies are being managed properly and used according to the charter and all the agreements.” It is their obligation to make sure that all activities and the use of funds are in line with the cause that the organization supports.
Board discussions in business oriented organizations are largely focused on maximizing shareholder value. On the other hand, non-profit boards of directors are more fixated on the altruistic aspect of the organization and how to best serve the goals of the organization.
In all her time spent with non-profits Ginger said, “There’s a lot of conversation around the altruistic charter as well as how are we using the money and does it fulfil on the altruistic side of what we’re trying to achieve.”
Most members on a non-profit board of directors serve as volunteers without any compensation. They volunteer their services for the good of the company and to show their support for the cause. For-profit members, on the other hand, receive either monetary compensation or a share in equity, or both, from the firm.
Ginger Silverman served as a board of director on Susan G Komen, which is a non-profit organization dedicated to saving lives and ending breast cancer forever. She says it is one of the best run non-profit boards she has ever worked with. Ginger said, “They are extremely strategic and have highly functioning leadership; all the way from the executives who run the organization to the advisory board and the board of directors. They are extremely professional in how they approach running their organization. And they’re very similar to my experience with for-profit public boards.”
Just like with corporate governance, non-profit boards of directors make strategic decisions to run effective, cost controlled operations providing high quality services under strong leadership. Although non-profit board members may not be paid for their contributions, they commit as much energy and zeal to the organization because they are highly passionate about the cause.
Some board members actually go beyond the traditional strategic advisory roles and duties and push up their sleeves to directly help in the non-profit’s work, like feeding the hungry or building houses for natural disaster victims. Because of their connections, many board members are involved in fund raising and raising awareness for the non-profit’s cause by public speaking at social events.
Pamela Wasley, CEO at Cerius Executives, had experience as a board member for Orange County Head Start – a non-profit designed to meet the educational, emotional, social, health, and nutritional needs of children and families. She, too, was impressed by the professionalism in the organization and on the board. It closely resembled the for-profit boards on which she was a member. “Head Start is strictly a federally funded non-profit so each board member has an important fiduciary responsibility to make sure all of the money is being used wisely and according to the rules and charter of the organization. Otherwise, Head Start could lose their federal funding.” Pamela said.
CEO’s and Board of Directors
In for-profits, it is normal for the Chief Executive Officer (CEO) to serve on the board of directors and often times as the chairman of the board. But on non-profit board of directors, by design, CEO’s are not associated with the board. In the four non-profits that Ginger served on, the chairman of the board and the executive director were different which “created some really good checks and balances.”
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